Van Dyck Law, LLC is a full service Estate Planning & Elder Law practice. They write about comprehensive planning in the areas of wills, trusts, powers of attorney, medical directives, Elder Law and probate & estate administration.

February 2016

02/29/2016

Turning in financial forms is a pretty easy thing to do, but it easily can be shoved aside when other, seemingly important things are thrown at us. If this is a 401k enrollment form, and we decide to "take care of it later," some of us will wonder what could have been had we just enrolled when it first became available.

We've all faced similar decisions, and some we get right—but others leave us wondering the possibilities of what could and should have been. Forbes' article, "10 Financial Choices You'll Regret in 10 Years," discusses some financial decisions that you'll kick yourself for in 10 years. Let's take a look at five of these now:

Starting your budget way too late. Most people think that budgeting means not being able to spend money on the things they really want, but it's really a freeing exercise. You can recognize the areas of your life where you're wasting money on things that aren't important to you. Look at where you can use some money for something that is more desirable. As a result, instead of an expense that you could care less about, you will put your money to better use. If you've been putting off beginning to budget, start today and discover its amazing benefits.

Not paying off credit cards each month. Some of us grab credit cards left and right and keep telling ourselves that we can make the payments later. "Later" can become never, and credit card debt can start to pile on to the point of suffocation. Try to pay off your credit cards quickly to keep more money in your wallet instead of giving it over to some large credit card company. If you aren't able to control your credit card spending, stay away from credit cards altogether. You'll be better off.

Purchasing a financial product without investigating. It's not that hard to do a quick search online, so don't put your money into investment products you don't understand. Do your homework, get a second opinion, and make sure you understand how the investment works and what the real costs are.

Putting the emergency fund on the back burner. Things will happen—that's why we have emergency funds. A good rule of thumb is to have at least six months' worth of living expenses in your fund. Your emergency fund money should be stashed where you can retrieve it quickly without much risk to your capital, such as an online savings account.

Buying a new car that you can't afford. Vehicles are important for many of us, but they are a discretionary purchase. It's transportation, remember, and a big car payment can wreak havoc with your retirement goals. Do you know the differences between a car that's three to five years old and a brand new car? Not many, in most cases. So why spend the extra money?

Work on these items, and you'll be less likely to kick yourself in the future.

02/25/2016

"As we train students, we want to give them the opportunity to understand and appreciate the needs and sacrifices of disabled veterans."

Harvard Magazine's article, "Fighting for Veterans, Learning the Law," tells the story of a letter for Wilson Ausmer Jr. which wasn't good news. In 2011, Ausmer, a lieutenant colonel in the U.S. Army Reserves, was in Afghanistan, serving his third tour. He suffered from post-traumatic stress disorder (PTSD) related to his time on the battlefield, and his foot was seriously injured.

The letter contained information on how he could file an appeal for disability compensation and stated that he had to respond within 120 days of receipt. But Ausmer wouldn't return home for another five months.

By the time he read the letter, he'd lost his one chance to appeal his benefits case. The Veterans Benefits Administration gave him no help, but a trio of Harvard Law School students did. They took his case, arguing that the clock on an appeals claim should start only after a veteran has returned home—rather than when a letter arrives in his or her mailbox back home.

The students became involved in Ausmer's case in 2013, while at the Harvard Veterans Law and Disability Benefits Clinic. Each year, dozens of students have assisted veterans with legal cases, winning verdicts of local and national importance.

Ausmer's student defenders argued their case in front of the U.S. Court of Appeals for Veterans Claims. The court's ruling in the veterans' favor marked a landmark victory. It allowed recently discharged veterans like Ausmer—whose ability to file an appeal is "materially affected" by their service—to be permitted extra time from their discharge date to appeal.

This decision could help thousands of former soldiers.

The Harvard law students can choose to represent veterans in administrative and federal court appeals by challenging denials of federal and state veterans' benefits—like Ausmer's case; represent clients and their families in estate and financial planning matters; or represent clients in administrative and court appeals on issues of denial of Social Security disability benefits.

The goals of the clinic—which also deals with issues of administrative, disability, mental health, probate, and constitutional law—are service and the method and practice of teaching.

Think of estate planning as how you would like things to be, and to be divided, to minimize stress on your loved ones and avoid nasty family fights that can occur after the funeral. You can minimize problems and decide some of the tough issues before you pass away. Estate planning is a thoughtful gift for your family and friends.

Retirement planning is much broader—and your estate plan should be included as an important piece of your retirement plan. An estate plan has three basic goals:

To give you control over your assets as long as you are able to do so.

To protect you and your loved ones in case you become incapacitated.

To distribute your assets in accordance with your intentions after your death.

Again, a retirement plan has broader goals such as:

Ensuring that you have enough assets to support your retirement lifestyle.

Ensuring that potential health care issues can be met in the location where you retire.

Proximity to friends and family.

Deciding what to do with the time you previously devoted to your job.

Creating an estate plan that is consistent with your goals.

The earlier you start your estate planning, the better. If you are 18 or older, you should have a basic estate plan in place. Start planning for retirement on your first day of work!

02/23/2016

Millennials are not discussing end-of-life care with their parents. Nevertheless, to save your loved ones avoidable pain and legal wrangling at your death or if you become incapacitated, you should begin your estate planning today and that includes a conversation with your millennial children.

Wills: A will describes who will be in charge of your estate at the time of your death and to whom you want your assets to be given. You can also use a will to nominate a guardian for your minor children.

Living Trust: This is a common way to transfer assets upon your death and without probate. Typically, a trust will have property titled in it and will document what should happen to the assets upon your death.

Durable Power Of Attorney: This ensures that an individual you select has the authority to make decisions regarding your financial life in the event that you are incapacitated or unable to make decisions on your own, such as financial and legal matters.

Health-Care Proxy: Like a durable power of attorney, a medical power of attorney give a person you designate the authority to make medical decisions on your behalf if you can't make those decisions yourself.

Advanced Health Care Directive: This allows you to list your healthcare preferences and can be used, along with your health-care proxy, to make certain that your medical wishes are carried out.

HIPPA Release Form: This allows those listed on your advanced health care directive and your health-care proxy to access your healthcare information so they can handle issues on your behalf if you are unable to do so.

Tax Documents: Can you believe that death does not stop taxes? Most taxpayers don't have to worry about federal estate taxes, but some must be aware that an estate over $5.45 million is liable for estate taxes, with some exceptions. Some states, like New Jersey, also have a state death tax in addition to federal estate taxes.

Plan now so that your loved ones don't have to face legal obstacles and stress that could have been avoided. Speak with an estate planning lawyer and help your loved ones avoid unnecessary expenses, legal headaches and additional pain.

02/22/2016

"Now that everyone has settled into the New Year, it is a perfect time to review and update your estate plan."

Situations change and, as a result, you need to consider any changes to your estate planning documents. There are marriages. Children are born and adopted. Loved ones and friends pass away. Because of these changes, taking the time to update previously drafted documents is critical.

Dairy Herd published a valuable article, "Legal: Review and update your estate plan now," which advised that you should at least have the basic estate planning documents in place. This includes a will, a power of attorney, a medical power of attorney and an advanced healthcare directive (often called a living will). Also, some should look into trusts, depending on individual situations.

Taking the time to prepare these documents now can help avoid fighting and stress for loved ones left behind.

Create a "Death File." After you have your basic estate planning documents in place, gather them in one place and inform two responsible people of the file's existence and location. It can be placed in a home safe, a bank deposit box or on file with an attorney. The person(s) named as your power-of-attorney and executor need to know the location of these documents and have the ability to access them if needed.

Review Documents for Updates. As mentioned above, it's important to review these drafted documents periodically to see if any changes are needed. Also, when you review a will or a trust, look to see if any of the property listed has been sold, transferred, or purchased. If it has, update the documents to reflect the change in ownership.

Check and Update Beneficiary Designations. Not all property passes in the estate by a will. Some assets, like a 401(K), are passed to the beneficiary of the account regardless of what a will says. This is also common with life insurance, pensions, transfer on death accounts, and accounts held as joint tenants with right of survivorship.

Look at Potential Estate Tax Liability. The federal and Pennsylvania estate tax exemption for 2016 is $5.45 million per person. The New Jersey tax exemption for 2016 is $675,000. To see if tax liability might be an issue, the estimated fair market value of assets needs to be calculated. Talk to an estate planning attorney if your estate may be close to the exemption limit. An experienced attorney will be able to discuss options to avoid the federal estate tax.

An up-to-date and comprehensive estate plan will help ensure that your intentions are carried out and will help to avoid headaches among survivors. Once the planning is done, however, don't forget to conduct a periodic review.

02/19/2016

"There was a lot of mismanagement of money, not just in Detroit but also New York."

The family of a Pentecostal bishop from Detroit says the national megachurch he built before his death is keeping them from inheriting what they believe to be up to $10 million, according to The Detroit News in "Family battles over megachurch founder's estate."

Bishop William Bonner's two adult grandchildren say his survivors are being shut out of their inheritance, and they believe officials with a Harlem church are hiding money and records about property that belongs to the family.

Bonner died in April at age 93, after suffering from dementia and complications from a stroke. He founded Solomon's Temple in 1944, which has grown into a 2,500-seat sanctuary. His real estate empire includes as many as 30 homes and other properties in several states, his family says. His survivors want the church to open its books on his financial affairs to give them more information about the bishop's Will detailing property and cash that they claim should be part of their inheritance.

The family, which has no part in church business, is fighting for the right to sell the late minister's property, while church officials argue any sale proceeds belong to the church.

Grace Bonner said her grandfather's Will was changed less than a year before he died, which she said is suspicious. Family members have filed the lawsuit to force church leaders to answer questions about what has happened to their grandfather's estate.

A widower, Bonner was survived by his son, William Lee Bonner Jr., and his granddaughters.

Bishop David Maxwell, pastor of Solomon's Temple until 2013, said Bonner's health began to deteriorate around 2008 and he began to "appreciably" deteriorate a few years later. He said his concerns led him to call Bonner's son beginning in 2011 about Bonner's health, "encouraging him to become more actively involved in his father's affairs."

02/18/2016

If you have an estate plan in place, you're in the minority: 51% of Americans age 55 to 64 don't even have a Will, according to a survey reviewed by Forbes in "8 Reasons to Revise Your Estate Plan Today." The odds are good that your personal and financial situation will change at some point. So you need to periodically review your estate to make sure it reflects your current goals and requirements.

Even if your estate plan was crafted by a skilled and experienced estate planning attorney, you'll want to talk to him or her if any of these things occur:

Marriage or Re-marriage. This doesn't automatically change the provisions of your will or trust and won't necessarily provide for your new spouse. Talk with your attorney to ensure your plan reflects your new goals, both individually and as a couple.

Divorce. After a divorce your goals will probably change and so should your estate plan. When your divorce is finalized, revise your plan as quickly as possible to reflect your new goals and intentions.

Children. When you have a child or adopt, you'll probably want your son or daughter to be the recipient of your estate, and you need to appoint a legal guardian for your child in the event you and your spouse die or are incapacitated.

Injury or Illness. If you (or one of the members of your family) become seriously ill, you may want to consider changing your estate plan to reflect their increased needs. For example, a special needs trust lets you leave assets in a trust that will not disqualify him or her from receiving government benefits.

Change of Plans. With time your goals and intentions naturally change, and your estate plan should reflect your current intentions, not the goals you had five years ago.

You inherit. If you or your spouse expect to get a sizeable inheritance, there may be new opportunities to reduce taxes or provide creditor protection. The increased value of your estate may also mean you change how your assets will be distributed when you die.

Buy or sell a business. If you purchase a business, you may want to create a succession plan. If you sell your business, the capital you receive may require a different plan for asset distribution and reducing the tax burden for your heirs.

Moving to another state. Estate planning documents are generally legal from one jurisdiction to another, but each state has its own laws. If you move from a separate property state (like Virginia) to a community property state (like California), you might want to convert your separate property to community property to take advantage of favorable income tax treatment.

If you experience any major personal or financial event—like marriage, the birth of a child, divorce, or selling or buying a business—review your plan with an experienced estate planning attorney to make certain all of the changes are incorporated. Even if your personal situation hasn't changed, you should have a periodic review with your attorney to assess the impact of changes to federal and state laws.

Life isn't a one-time event, and neither is estate planning. Your plan has to change as your life changes.

02/17/2016

A legal battle in New York shows an aspect of estate planning that often doesn't see much discussion: the fees for the executors.

According to a recent Wall Street Journal article, "Battle Involving Leona Helmsley Estate Spotlights Issue of Executor Pay," the New York attorney general has challenged the proposed fee on the estate of real estate mogul Leona Helmsley. The $100 million sought by the executors, including two of Helmsley's grandchildren, is "astronomical" and should be reduced by 90%, the state Attorney General Eric Schneiderman said.

An issue in this case is that the will does not specify how the executor fees should be calculated, while ruling out the use of a fee schedule in state law, according to the attorney general's filing.

Many wills don't mention executor fees, and state law then determines the fee. Many states base the fee (also called a "commission" in some states) on a sliding percentage of the assets of the estate. In New Jersey, the commission starts at 5% on the first $200,000, declines to 3.5% on the excess over $200,000 up to $1,000,000 and then 2% on the excess over $1,000,000. In New York, the commission starts at 5% of the first $100,000 and declines to 2% on amounts above $5 million. So in New York, the total fee on a $1 million estate would be $34,000, or 3.4%. There are variations in every state, but the average on an estate of that size is typically about $30,000, or 3%.

Many states allow for extraordinary fees for especially complex estates or estates involved in litigation. States also are different in which assets are included in calculating the executor fee. Some states say only that executor fees must be reasonable, subject to court review. In those states, you should detail fee arrangements to help avoid legal battles later.

In states with fee scales, individuals may cap the fee in their wills at an amount below the amount allowed by statute. Others will provide for payment to an estate planning attorney as executor based on their hourly rate, if they think the cost will be lower than the state's asset-based scale.

In the Helmsley case, the executor fee calculated using the state schedule would have been a $200 million. The $100 million requested by the executors was equivalent to $6,437 an hour based on records of how much time the executors spent working on the estate.

Compensation for executors who are friends or family usually isn't a big deal when the families aren't uber wealthy—particularly when the executors are also beneficiaries. Typically the executors will waive a fee because paying tax on the fee at ordinary-income rates wouldn't be good if instead they receive the money as a bequest tax-free.

Nonetheless, in some situations, people who are asked to be executors may want to inquire about fees. An executor's job can be time-consuming and complicated, even if the estate is not that large. The executor will be responsible for collecting and valuing assets, paying debts and taxes, and speaking with potentially fighting or stressed out beneficiaries.

02/16/2016

Money and death top the list of conversational taboos — especially among family — so a conversation about them might seem toxic. But it must be done. Baby boomers who haven't told their heirs about their estate plans shouldn't wait for the perfect moment, experts say in a MarketWatch article, "How to tell your kids how much money you're leaving them."

A recent survey found that 72% of parents experience at least some reluctance to discussing financial matters with their children. That's not in anyone's best interest. Disorganization and miscommunication can be costly. The costs can be in dollars, as heirs miss tax deadlines and other opportunities sorting through the files, and in hurt feelings and confusion, as children struggle to understand their parents' decisions.

Here are some ideas for boomers who want to start the process:

Decide how you want to communicate. Don't ambush your children with this discussion. Instead, the first conversation should be how to have a discussion about this subject. Tell them what you want to discuss and ask them how they'd like to proceed. Ready them for several conversations so that they're not overwhelmed with everything in one sitting. If you have several kids, ask if they'd like one-on-one conversations or a group talk. Decide on a date for the first conversation, set the agenda, and review your financial and estate planning documents.

Don't start with the bottom line. You might want to jump to the big stuff and discuss who's getting what, but an estate plan involves much more than divvying up assets. It should involve values, which ideally started with parents talking about money with their children when they were young and emphasizing the value of hard work and the importance of saving. If that didn't happen, it's never too late to start. Next, discuss who you plan to designate as your health care power of attorney to make medical decisions in the event you can't do so yourself and who you'll name as your financial power of attorney to handle financial transactions on your behalf. Many people name their spouse as their primary agent, but you should also name a younger person to serve as a secondary agent if the first can't. Also, mention who you plan to name as the executor of your will.

Get some feedback. Children's feelings may be hurt if they don't understand why you designated one child over the other. Tell them your reasoning and ask for input through phrases like "Am I missing anything?" or "Tell me if I'm thinking about this the right way." But remember that you're the ultimate decision maker, and you don't need to change your plans because of your children's opinions. You can just say, "I respect your feelings, but I decided to go ahead with this plan."

If the discussion about powers of attorney and executors doesn't go well, you may think about ending it right there and not discussing your assets. If the discussion goes south, maybe you need to just let your will or trust do the talking after you're dead. You can always include a letter of intent explaining decisions posthumously.

Move carefully with the assets. If you decide to discuss your assets, proceed with caution. There may be arguments over small, symbolic items like jewelry. If so, parents could ask their children which items they'd like the most and do their best to give them some of them.

With dividing up dollars, many middle-class families don't know how much money they'll have left over, if any, after their retirement. That's reason enough to use percentages and not dollar amounts. But adult children still need to know where assets are located if they need to pay for long-term care. If you have these discussions now, it will be much easier to communicate that in the wake of a sudden accident or illness.

While you are at it, consider involving your estate planning attorney in this conversation with your loved ones. He or she can answer any technical questions that come up.